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Total money to the table at the beginning of the rehab $24,912.70. Total money I was out of pocket from the day I bought to the day I sold- Actually exactly 6 months later $134,912.70- $40k rehab given by lender=$94,912.70

I’m not gonna lie to you- Usually I keep a spreadsheet so I can tell you how much my rehab costs to the penny but there were days when I didn’t wanna do my spreadsheet because the numbers seem to not want to stop and after a while I just rounded up the number. It just keep going up and adding up and after a while I was like Oh my god what the hell- Where is a camera when you need one.

The tv shows look so easy- Go over budget just add an extra xxx to the price and house sold. It’s not true! Now I got lucky in this case I bought better than I thought I had- If not for that saving grace this post would read something totally different.

Now let me be totally honest for any newbie reading this post- Typically if you go over budget from what you originally told or worked out with your hard money lender then that money comes out of YOUR pocket until the house sells- As was the case with this house. Occasionally I think you can talk to the lender about helping you out but I’ve never taken that road.I’m not saying that it cannot be taken but I’ve never taken it.

How did I go over budget? I took on a very old house that I wasn’t familiar with- I got a GC estimate that was way too low and I believed that I could have made it work. Now because the scope of work changed after I bought the house- my hard money lender refused to give me draws till I passed all my inspections even though I was only getting back 40k of my 110k. So I went thru 100% of the rehab having received only 20k from my lender. I got the final 20k when the house was on the market. So yeah big sigh of relief for me- Look I got 20k back in my pocket but I’m out 70k till it sells.

The reality sets in- Okay the reality of the situation set in when I realized I had to go do new plumbing, electrical- entire house of duct work because originally had radiator heat coupled with the fact that I changed GC half way thru the process, prior GC got a deposit and I let him walk because of issues with another rehab project so I had to add that loss into my budget. This was the last house I used a GC on by the way. I’ve been my own GC ever since and it has worked out better than ever. Then I also had to get architectural drawings as well- decided that since I was spending so much money we should move the laundry room upstairs and move the bathroom to a new location.

I don’t know if any other post has ever stressed the BUY RIGHT but if there hasn’t been one let this be the first- Typically someone who goes over budget by so much is usually left broke and crushed under the weight of it all- Luckily I had enough cash and the ability to complete the rehab and get from under it and not let it stop me from doing other projects.

Just saw this post. This is ironic. I was just about to post how I was getting frustrated because in 4 months I've only found 2 distress properties that I was comfortable enough with to put an offer on. I was out bid on both. Don't get me wrong, there are plenty around. I'm told that I over analyze. I'm just getting back into rehab flipping after an extended hiatus. I guess there's a little fear of pulling that trigger. I have a good team, an equity partner and rehab experience.... And no property! It's stories like this that reaffirm my over analyzing habits. I've got to find that happy elusive medium. Thanks for sharing.

@Steve Bradigan I don't think the point I was trying to make was about over analyzing and not pulling the trigger. I think action in this business is very important. I think my point was to emphasize that even someone who flips full time and usually is spot on can be wrong.

I think alot of times we only hear the great success stories on here but never the oh crap ones- its kinda glossed over. I think my point also is for those who think that they can get into flipping with no money, Yes I know it can be done so many have done it but if you should come up on one that you made a mistake and you have no money its over.

I do have to mention that as horrible as my story was- I've never lost money on a rehab to date- This was a close call but I didn't. I think sometimes when we over analyze we talk ourselves out of great deals. Deals that other people see a great value and we just see an okay value. Its winter and there are lots of deals- You can find a great one. GO FOR IT!

@Steve Bradigan I don't think the point I was trying to make was about over analyzing and not pulling the trigger. I think action in this business is very important. I think my point was to emphasize that even someone who flips full time and usually is spot on can be wrong.

I think alot of times we only hear the great success stories on here but never the oh crap ones- its kinda glossed over. I think my point also is for those who think that they can get into flipping with no money, Yes I know it can be done so many have done it but if you should come up on one that you made a mistake and you have no money its over.

I do have to mention that as horrible as my story was- I've never lost money on a rehab to date- This was a close call but I didn't. I think sometimes when we over analyze we talk ourselves out of great deals. Deals that other people see a great value and we just see an okay value. Its winter and there are lots of deals- You can find a great one. GO FOR IT!

Oh I understood your point. And kudos to you for still coming out on top of that deal. I am guilty of talking myself out of a deal. I'll get over it - just have to find that right first one!

Hi @Ophelia Nicholson great post. I look forward to the before and after pics. Question for you, how many quotes did you get from GC's prior to starting the work? I know you mentioned one came in and it ended up being too low due to extra work that needed to be done. I'm kind of running into the same thing in a rehab were doing on one of our rentals. It started out as a paint and new carpet type of deal and now the bathroom is down to the studs and is getting 100% replaced. As we started to rip flooring up we uncovered other problems etc.

@Rob L. Originally I got a quote from the one GC that I worked with but while we worked on another project I realized the work was crappy and I was acting more like a GC than he was - I was already full time so I was on the job sites every day pointing out inconsistencies (don't know if I spelt that right).

Long story short I was 42k out of pocket for another house my hard money refused to give me my draw on that house and I fired that GC that day. Hired a new one after 2 quotes and ended up firing him 10 weeks into the new job. Hired someone else for the last 2 weeks of this house and fired them. And said okay no more GC.

At the end of the day it was ultimately my fault - I took on a project that I didn't know anything about due to age and factors that come with historic houses. Now with that said I'm buying a shell in same neighborhood on Tuesday.

I know this thread is old but I just found it while searching BP for some info. I am commenting on it to say thank you to @Ophelia Nicholson for her candidness with the information she shared. It is refreshing to read a story that isn't simple success story.

The other reason that I am writing on this thread is because I am sitting here trying to determine what I can offer for a house I went in this morning. Since then I got a text from my Realtor stating that the seller really wants close to their asking price and she (Realtor) wanted to know if I thought I could rehab the house to be "livable" and low end vs. the high end that the neighborhood would easily support. The house needs close to a full gut and lots of the stuff that isn't pretty and you can't see -- electrical + plumbing + mechanicals + new (flat) roof. Reading Ophelia's notes here made me think "Have I really considered ALL the stuff that I need to include?" And it was then that I realized "ohhhhhh. There was no existing laundry in the house. I need to plan to add that." I had overlooked this when I toured the house and made notes.

Doug, does the flat roof need to be replaced? Often times a good (not acrylic) liquid applied membrane can salvage a flat roof and even have a warranty of up to 20 years included. We have done dozens of these in this manner and had good results and though it isn't the answer in every case it might be in yours.

This has been a great eye opener regarding older properties. I would absolutely love to rehab old properties. However I know that a full gut is usually in order. Which costs more than a regular flip. There are historical tax rehab credits where I live in Richmond.
I learned that you could actually get a regular loan for the purchase of the property then use the hard money lender for the cost of the rehab. Is that somewhat correct as far as the financing?